(Bloomberg) — The network underpinning one of this year’s fastest-rising cryptocurrencies is having problems validating transactions, according to a Twitter account run by the Solana project.
The issue stemmed from “resource exhaustion” in the network that caused denial of service, one tweet from the Solana Status account said over eight hours ago. Third parties that validate transactions on the blockchain elected to coordinate a restart of the network and are preparing a new release, the developer team said later in a statement.
“It has some interesting technical features, but realistically Solana hasn’t yet been fully tested in a live setting,” said Strah Savic, head of data and analytics at FRNT Financial. “What we are likely seeing is the experimental nature of blockchain tech playing out.”
The price of Solana has surged 256% over the past 30 days to recently trade at $156.83, according to CoinGecko.com, which is down from its high of $173.28 over the last 24 hours. It’s up more than 31,000% from its low of 50 cents in May 2020, giving it a value of about $47 billion. That makes it the seventh-biggest cryptocurrency, according to CoinMarketCap.com.
Some trades on Tuesday were taking longer to process than the time allowed by the network, meaning transaction blocks couldn’t be finalized and trades weren’t being processed, according to a person familiar with the situation. A process to restart the network would need to be agreed upon by a consensus of the Solana community, the person added.
A technical issue about two weeks ago caused a period of “intermittent performance degradation” that lasted about an hour, according to the Solana Status Twitter feed. That issue is still being investigated but it’s believed to have been also caused by automated bots flooding the network with transactions to buy a certain new coin, according to the person familiar with the situation.
Like Ethereum, the Solana blockchain is a platform for decentralized finance, or DeFi, applications. The goal of Solana is to create a fair and open financial system, where no one entity has a speed advantage over any other, Solana co-founder Anatoly Yakovenko, a former Qualcomm Inc. engineer, told the “Odd Lots” podcast last month.
The issues on Tuesday mean that other crypto protocols built on top of the Solana blockchain are having problems connecting to the network. That includes Pyth, one of the highest-profile applications, which feeds DeFi projects price data on stocks, cryptocurrencies and other assets sourced from some of the world’s biggest trading firms such as Jump Trading Group, Virtu Financial Inc. and DRW Holdings LLC.
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Although it’s difficult to speculate on the issue until more information is available, third-party sites do show that transactions aren’t being processed by Solana, said Savic. And the Solana network’s native token — SOL — is up 2%. “Similar past technical red flags on other networks have been ignored by crypto investors,” he said.
(Adds comment from the developer team in the second paragraph.)
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